The social surplus in a market is $50. If another economic agent enters the market such that the marginal cost he incurs is $10 and the marginal benefit he receives from the trade is $5, then which of the following statements is true?
A) The social surplus will remain the same.
B) The social surplus will increase by $5.
C) The social surplus will decrease by $5.
D) The social surplus will increase by $10.
C
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Marginal benefit is the benefit that a person receives from consuming
A) a good or service until the person has grown tired of it. B) only goods and services that are free. C) one more unit of a good or service. D) all of the possible units of a good or service that can be consumed. E) one more unit of a good and is equal to the cost of producing the unit of the good.
For a single-price monopoly,
A) if marginal cost exceeds marginal revenue, profits will increase if output decreases. B) if marginal revenue exceeds marginal cost, profits will increase if output decreases. C) there are several different price and output combinations that maximize profit. D) marginal revenue will be greater than price if demand is elastic. E) marginal revenue will be greater than price if demand is inelastic.